Knowledge Management: Improving Functioning of Business

Executive Summary

In the present day business context knowledge management with its components change management, best practices, risk management and benchmarking is occupying a vital position with respect to its contribution to the enhancing the competitive advantage of the firms. In this connection it becomes necessary to study various aspects of knowledge management as they apply to business situations. Moreover with the increased use of innovations and improved technology the firms are under pressure to keep their employees’ knowledge up to date so that they could contribute effectively to the achievement of organizational objectives. In this context this paper presents an informative report on knowledge management in general and the need for knowledge management for improving the functioning of the business in particular.


It has become increasingly important for the businesses to know the level of their knowledge, and the ways in which they can apply their knowledge base for the development and growth of the business. One must know that there are different places in which the knowledge of a company stored and such places are distributed across the organization. Some of the places in which the company can find the existence of its knowledge are the data base, knowledge bases, and the brains of the people working with the organization. It may so happen that one department of the organization may be repeating the work of another department due to the fact that the departments are unable to keep track of what other departments are doing. Hence it becomes vitally important that the enterprises makes an assessment of what are their knowledge assets and what are the best ways to manage their knowledge assets and make the best use of them to get a maximum return. Most of the traditional policies and control systems of the companies while concentrating on the efficient management of their tangible assets leave the important knowledge assets mostly unmanaged.

However it has been observed that success in an increasingly competitive market place could be ensured only when the organizations improve the quality of their knowledge and the ways in which they apply to their key business processes. An example may be found in the necessity of the supply chain management to gain more knowledge on diverse areas of sourcing raw materials, planning, manufacturing, and distribution. Similarly the product development needs complete knowledge on customer needs and preferences, new technological developments and marketing. In brief knowledge and information have become the medium in which the business situations develop. As a consequence knowledge management is being considered as the foremost opportunity for the businesses to achieve substantial savings, considerable improvements in the performance of organizational members and enhancement in the competitive advantage. In this context this paper presents a detailed report on the specific needs of the businesses to attempt to practice knowledge management and the advantages accruing to the organizations by an effective and efficient knowledge management.

Statement of the Problem

Knowledge management has assumed greater importance in the businesses all over the world and especially in the American business context, as there will be a complete change in the people handling the business issues, due to the retirement of baby boomers. When these baby boomers finally leave their jobs, the knowledge they have acquired over the period of their long years of service about their jobs, enterprises and industries would go with them. This is sure to happen unless the companies take adequate measures to retain their knowledge in some way within the companies. In addition to the issue of mass retirement from the companies, there is a new issue that is associated with outsourcing. While entering into outsourcing arrangements, there is the issue of transferring the knowledge of the employees who were working full time for the company to the employees outsourcing agencies in order to smoothen the transition of the process of outsourcing without disturbing the output. These and much more instances in the efficient functioning of business enterprises necessitate the need for identifying and managing the knowledge of the organizational members.

Academic Research

This section contains a review of the available literature on the topic of knowledge management.

The need for practicing knowledge management by the firms and the obstacles in practicing it is also discussed. This section also discusses the roadmaps to the knowledge management process.

Definition of Knowledge Management

The interpretation of the term ‘knowledge management often poses a problem, as no precise definition of the term has been evolved so far and there is no consensus about its definition (Neef 1999; Bhatt 2001). Many researchers preferred to focus on the specific areas of knowledge management like knowledge, innovation or learning (Costello, 1996). There are other authors who puts forth the argument that knowledge management is closely related to concepts such as organizational learning, organizational memory, information sharing and collaborative work (Schultze, 1998) According to Harry Scarbrough knowledge management includes “any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organisations.” (Scarbrough Swan et al. 1999)

Components of Knowledge Management

Knowledge management has emerged as a new and innovative trend with interdisciplinary model. This model deals with all aspects of knowledge within the context of the firm like creation of knowledge, codification, sharing of knowledge and management of all these aspects efficiently. The essence of knowledge management is to make these activities contribute effectively to the process of learning and innovation within and outside the firm. The knowledge management encompasses both technological tools and organizational routines in overlapping routes.

The following are the integral components of knowledge management:

  • Generation of new and innovative knowledge.
  • Acquiring knowledge from the sources available externally.
  • Utilizing the available and accessible knowledge in the process of managerial decision making.
  • Embedding technical and other knowledge in the production processes, manufacture of products and services.
  • Accumulation of knowledge in database, documents and software.
  • Promoting the growth of knowledge through organizational culture and provision of incentives.
  • Transfer of vital knowledge from one part to other parts of the organization.
  • Finally measuring the value and impact of knowledge management on the other functions of organization (Gotcha).

Need for Knowledge Management

The need for knowledge management can be seen from the following different purposes:

  • The business environment is becoming increasingly competitive. There is an increasing trend in the innovations in products and product designs. This has led to the necessity of acquiring the required knowledge and skills to be evolved and assimilated at rates faster and rapid than at which the technology and innovations are progressing.
  • Creation of customer value has become the core objective of the business organizations of the present day. For achieving this, the firms reduce the staff functions and management structures. This has evolved the need for aligning the informal knowledge management with formal methods that govern the customer aligned business processes essential for business growth (Rebecca & Philip).
  • The increased competitive pressure has made the organizations reduce the working force to the minimum levels and this has enhanced the need for an efficient knowledge management to utilize the available working force effectively.
  • The need for knowledge management even in smaller operating companies has increased due to the sourcing by the trans-national organizations from these firms.
  • The other factors that enlarge the need for knowledge management are the early retirement and increasing mobility of the workers which lead to loss of knowledge.
  • Since there is a complete change in the traditional ways of approaching the business issues, the time available for gaining experience and acquiring the required knowledge has greatly diminished which has resulted in increased need of knowledge management (AIAI).

Obstacles in Practicing Knowledge Management

There are certain problems associated with the identification of the knowledge assets and making use of them. There are issues identified with the management of knowledge in an efficient and at lower costs. In the process of knowledge management the firms need:

  • to formulate systems and procedures that will promote a business language that exists throughout the organization so that the knowledge is perceived and understood correctly and with the same meaning and intent by all the members
  • to be able to identify and develop such a knowledge management model that could represent the knowledge of the organizational members explicitly
  • to share and re-use their knowledge among differing applications for various types of users; this implies being able to share existing knowledge sources and also future ones
  • to create an organizational culture that has the capability of making knowledge sharing possible

Road Maps for Knowledge Management

The Knowledge Asset Road Maps represents the total critical knowledge assets that an organization need to acquire to cater to the needs of the market for the foreseeable future period of say five or ten years. The road maps are the mechanisms that the organizations need to employ that enable the organizations to visualize their critical knowledge assets, the existing connection between them and the skill levels, core competencies and upgraded technologies required to cater to the future demands of the respective organizations (Ann Macintosh et al 1998). The Road Maps allow:

  • the definition and justification of individual management actions with respect to their contribution to the overall organizational objectives of the firms;
  • the process and programs relating to the knowledge management should be effectively communicated to the participants to the program;
  • the management to provide all the required help to those involved in the carrying out the program and in measuring the progress of knowledge management;
  • the process of more effective communication among the users, researchers, technicians, managers and directors who assume different roles in the process of knowledge management;
  • a decision process that enables the management to take decision which are sensible and which apply to the opportunities for exploring the knowledge management program;
  • the identification of the knowledge gaps in the total program and the ways to fill up the gaps so identified.


Despite the pressing need for the knowledge management programs in any organization, there are several obstacles identified that hinder the process and utility of the knowledge management. However, over the period several engineering and technological tools which address the issues relating to the use of the knowledge assets of the company. The purpose of these tools is to provide disciplined approaches to designing and building knowledge based applications. There are other tools that have been developed specifically to support the gathering, modeling, validation, verification and maintenance of the knowledge at all levels of the organization. However it has been observed that such tools do not represent comprehensive ones to support the knowledge management process at various levels of the organization.

As a strategic measure in the direction of knowledge management, the firms have to make a complete assessment of the depth and extent of the knowledge they currently possess and the level of knowledge needed by them to enlarge the growth of the business in the future. For achieving this, the organization has to do the following at the tactical level:

  • Identification and formalization of the existing knowledge at various levels of the organization;
  • acquiring new and improved knowledge for use in developing the future;
  • accumulating the organizational memories;
  • creation of systems and procedures that ensure an effective and efficient application of knowledge within the organization.

At the operational level the organization should ensure that knowledge is used by the managerial and professional people at all levels who are in need of the right knowledge. There should be efficient systems to provide the right knowledge at the right place and at the right time.

Another finding out of the study of the academic literature relating to the knowledge management observes that the knowledge management mechanics and knowledge management culture are found to be the logical culmination of a systematic approach. It is also observed that many of the knowledge management systems are however not fully developed in that, the knowledge management metrics like surveys and benchmarking do still represent an inexact science and the knowledge workers are often resisting the application and practice of knowledge management process. It is to be noted that the knowledge management succeeds only when it is deeply enshrined into the organization and become intrinsic to it. The common knowledge management practice includes formal knowledge management leadership and formal rewards and recognition for the achievement in the knowledge management work.

The knowledge management incorporates tools and mechanisms which encourage the sharing of knowledge at all organizational levels. The knowledge management culture encompasses the basic fact that all knowledge has a social and evolutionary facet. In order to make the knowledge management effective there is the need to the make the knowledge management subjected to re-examination and necessary corrections. It is also important that the knowledge management should keep the human and social elements of an organization involved in all the accumulated knowledge. There are other limitations of the mechanical knowledge management. For example, too much reliance on technology produces knowledge which is consensual. This implies that such knowledge will have the impact of stifling innovation. In case of mechanical knowledge management it is possible to provide more information to the people. However it is not just enough that information is provided but making people use them is critical to the success of the organization (Prasanna).


From the foregoing discussion it can be reasonably be concluded that the knowledge management has increasingly been accepted as central to the success of any organization. The key achievement of knowledge management can be seen from the fact that the concept emphasizes the tacit dimension of the creation of knowledge within an organization and the need to recognize and value such knowledge. The concept also emphasizes that the knowledge management is highly subjective and interpretative. It stands far and distinct from the raw data or information. It is also observed that the knowledge creation largely depends on understanding the meaning of the business issues in their proper perspective and the paper endorses the view that knowledge is social and interactive in nature and hence managing the knowledge involves the following of a highly skilled process and techniques.


AIAI. ‘Knowledge Management’. Web.

Ann Macintosh, Ian Filby, John Kingston, and Austin Tate (1998). “Knowledge Asset Road Maps”in Proceedings of The Second International Conference on Practical Aspects of Knowledge Management (PAKM98); Basel, Switzerland.

Bhatt, C. (2001). “Knowledge management in organisations: examining the interaction between technologies, techniques, and people.” Journal of Knowledge Management 5(1): 68-75.

Costello, G. (1996). Knowledge Management in Strategic alliances: The Role of Information Technology Templeton College Oxford, University of Oxford.

Gotcha. ‘What is Knowledge Management (KM)’. Web.

Neef, D. (1999). “Making the case for knowledge management: the bigger picture”. Web.

Prasanna ‘Knowledge Management: A Practitioner’s Perspective’. Web.

Rebecca O. Barclay & Philip C. Murray ‘What is Knowledge Management’. Web.

Scarbrough, H., J. Swan, et al. (1999). Knowledge Management: A literature review. London, Institute of Personnel and Development.

Schultze, U. (1998). Investigating the Contradictions in Knowledge Management IFIP WG8.2 & WG8.6 Joint Working Conference on Information Systems: Current Issues and Future Changes, Helsinki, Finland, Omnipress, Wisconsin, USA.

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